Thursday, November 29, 2012

I noticed an interesting order issued on November 16 by the
District Court hearing Monsanto v. E.I. DuPont De Nemours and Pioneer Hi-Bred International.The case gathered quite a bit of attention
last August when a jury awarded Monsanto a $1 billion verdict for infringement
of a patent directed towards Monsanto’s Roundup Ready gene.Notably, DuPont had never brought the
infringing product to market.Under
Monsanto's damages theory, DuPont is liable for $1 billion in "reasonable
royalty" damages to compensate for its
use of the patented technology in
developing DuPont’s Optimum GAT soybean line (which includes both Monsanto’s
Roundup Ready gene and the GAT gene, an alternative to the Roundup Ready gene
that also confers resistance to glyphosate (trade name Roundup)).The
GAT gene is a synthetic gene developed by Maygen over a decade ago using DNA
shuffling technology. The jury's decision was discussed widely on the Internet,
for example on the Patently-O blog.

The recent order grants Monsanto’s motion to exclude
evidence regarding DuPont's Hatch-Waxman safe harbor defense.Most of the order is redacted, and I have not
read any other rulings or filings the parties have made, but I presume that
DuPont is arguing that it's infringement of Monsanto's patent in the
development of recombinant Roundup Ready corn is "reasonably related"
to the development and submission of information to obtain Federal marketing
approval, and thus falls within the Hatch-Waxman safe harbor.The safe harbor is normally invoked with
respect to drugs and medical devices regulated by FDA.

To my knowledge, the Hatch-Waxman safe harbor has never been
successfully invoked with respect to an agricultural product, and the
conventional wisdom would have it that the safe harbor is limited to drugs and
medical devices (see, for example, Dennis Crouch’s Patently-O blog post cited
above). According to the court’s order, DuPont has argued for a broader
interpretation of the safe harbor provision by relying on the following
language from the Supreme Court's 2005 decision in Merck v. Integra: “[the] exemption from infringement extends to all
uses of patented inventions that are reasonably related to the development and
submission of any information under the FDCA." The District Court held
that DuPont had taken the Supreme Court’s statement out of context, and that
“Merck did not expand the coverage of the safe harbor provision beyond
pharmaceuticals and medical devices.”

The Hatch-Waxman safe harbor, codified as 35 USC 271(e)(1),
states:

It shall not be an act of infringement to make, use, offer
to sell, or sell within the United States . . . a patented invention . . .
solely for uses a reasonably related to the development and submission of
information under a Federal law which regulates the manufacture, use, or sale
of drugs or veterinary biological product.

Congress created the safe harbor in 1984 order to speed the
approval of generic drugs, at least partially in response to Roche v. Bolar, a 1984 Federal Circuit
decision which held that the common law "research use" exception does
not apply to infringing activities by a generic company engaged in for the
purpose of generating data necessary for FDA approval of the generic drug. However, the courts have interpreted the
statute more broadly, extending the safe harbor to non-drug products and to
infringing activities not directed solely to obtaining FDA approval.

For example, in 1990, the Supreme Court held in Eli Lilly v. Medtronic that the safe
harbor is not limited to drugs, but also extends to medical devices.In assessing whether the safe harbor could
also apply to an agricultural product like corn, it is informative to consider
how the Supreme Court arrived at its holding in Medtronic.

To summarize, the Supreme Court found that Congress had enacted
the Hatch-Waxman Act in order to eliminate to unintended distortions of the
effective patent term resulting from the premarket approval required for
certain products by the Food Drug and Cosmetics Act (FDCA). The first distortion
was the reduction of the effective patent life caused by delays associated with
obtaining FDA premarket approval. The second distortion was the de facto
extension of effective patent life at the end of the patent term which resulted
from the inability of a generic competitor to undertake activities necessary
for obtaining FDA approval until after the patent expired. This second
distortion was reinforced by the Federal Circuit's decision in Roche v. Bolar.

According to the Supreme Court, the Hatch-Waxman Act
addresses the first of these distortions by providing patent term extension for
patents claiming a "product" subject to regulatory delays caused by
the FDA premarket approval process (codified under 35 USC 156). It addresses
the second distortion by means of the safe harbor. Congress intended the safe
harbor to allow competitors to begin the regulatory approval process while the patents
are still in force, followed by market entry immediately upon patent
expiration.

The scope of the safe harbor is determined largely by the
interpretation of two critical terms in 35 USC 271(e)(1), "patented
invention" and "reasonably related." In Medtronic, the Supreme Court concluded that the patent term
extension and the safe harbor provisions are complementary, meant to address
the two distortions, and tending to offset each other. Based on this
conclusion, the Court interpreted the term "patented invention" in
section 271(e)(1) to include all products listed in 35 USC 156(f) as eligible
for patent term extension, including drugs, medical devices, food additives,
and color additives. So while Medtronic explicitly held that the safe harbor
extends to medical devices, the logic of the decision dictates that it should
also extends to food additives. I haven't researched the question, but I am not
aware of any judicial decisions explicitly holding that the safe harbor extends
to food additives. Nevertheless, under my reading of Medtronic I think it should.

Whether or not DuPont is entitled to rely on the safe harbor
could hinge largely on whether its product is a “food additive” is under 35 USC
156.The infringement results from the
unauthorized introduction of the Roundup Ready gene into DuPont’s soybean line.
So the question becomes, is the Roundup ready gene (and its protein product) a
food additive under 35 USC 156 that qualifies for the safe harbor under Medtronic?

I'm no expert on FDA regulation of genetically modified
plants, and I have not researched the issue in any depth, but my sense is that
there is no clear answer to the question of whether Roundup Ready corn should
be treated as a food additive eligible for the safe harbor. Section 201(s) of
the FDCA defines a “food additive” broadly to include all substances that may
reasonably be expected to become components of food, but expressly excludes
substances that are generally recognized as safe (“GRAS”). My understanding is
that the FDA has taken the position that, with respect to foods derived from
genetically modified plants, both the genetic construct and the protein
expressed by the gene, could be considered food additives. However, it has also
indicated that most foods derived from genetically modified plants are
presumptively GRAS. According to a white paper published by the Pew Initiative
on Food and Biotechnology, entitled Guide to US Regulation of Genetically
Modified Food and Agricultural Biotechnology Products, the only genetically
modified food that has triggered the food additive process is Calgene’s FLAVR
SAVR tomato.FDA approved the selectable
marker gene used in the tomato, which encodes resistance to the antibiotic
kanamycin and its gene product as a food additive in 1994. 59 Fed. Reg. 26,700.

Again, based on my understanding, it seems that the Roundup
ready gene and its product are probably not food additives simply because
Monsanto (and other developers of Roundup ready products) have represented to
FDA that the gene and its product is GRAS, and FDA has acquiesced. But what if
DuPont had chosen to treat the Roundup Ready gene as a food additive, and
sought premarket approval from FDA? Wouldn't that make the Roundup ready gene a
food additive, and hence eligible for the safe harbor? And is it too late for DuPont
to seek FDA approval for Roundup ready as a food additive? Would not that
render Roundup ready a food additive just like Calgene's kanamycin resistance
gene?

Even if DuPont does not seek FDA approval of Roundup ready
as a food additive, I think that Federal Circuit precedent does not rule out
the possibility that Roundup Ready is nonetheless a food additive eligible for
the safe harbor. To illustrate, in 1997 the Federal Circuit held in AbTox v. Exitron that the safe harbor
applies to "all inventions" within 35 USC 156, regardless of whether
the product qualifies for patent term extension. In particular, the safe harbor
applies to Class II medical devices, even though these medical devices are
ineligible for patent term extension (Medtronic
involved a Class III medical device, a category of medical device that is eligible
for patent term extension).In other
words, the Federal Circuit extended the range of safe harbor-eligible subject
matter to include products lacking the symmetry of an offsetting patent term
adjustment. I could imagine some judges on the Federal Circuit deciding that a
recombinant trait such as Roundup ready is a food additive, even if the
manufacturer did not seek pre-marketing approval as a food additive, based on
the fact that FDA can regulate recombinant genes and their products as food
additives, and apparently has done so at least once in the past.

Assuming for the sake of discussion that DuPont could
establish that the Roundup ready trait in its soybean is a food additivefor purposes of the safe harbor, the safe
harbor would only apply if DuPont’s infringing activity was "reasonably
related" to potentially securing FDA approval. In 1992, the Federal
Circuit held in Telectronics Pacing
Systems v. Ventritrex that demonstrating a medical device at medical
conferences was "reasonably related" to FDA approval because it
facilitated the selection of clinical trial investigators. In 2005, the Supreme
Court in Merck v. Integra held that "reasonably
related" activity does not require actual submission of information to
FDA, but also includes those situations in which a party has a "reasonable
basis for believing that a patented compound may work, . . . and uses the
compound in research that, if successful, would be appropriate to include in a
submission to the FDA." On remand, the Federal Circuit held that the
preclinical research in question was "reasonably related" to FDA
approval. Perhaps DuPont could show that its pre-marketing activities
developing the infringing Roundup ready soybean were reasonably related to the
generation of data that might plausibly have been submitted to FDA.

Genetically modified agricultural products generally require
pre-marketing approval from EPA and/or USDA.This form of pre-marketing approval is outside the FDCA, and so does not
appear to fall within the literal scope of the safe harbor statute, i.e., these
are not Federal laws "which regulate the manufacture, use, or sale of
drugs or veterinary biological products.”However, with the imminent expiration of RoundupReady patents, there is
a great deal of interest in providing a pathway for the approval of
"generic" recombinant agricultural products. Congress could consider
expanding the safe harbor, for example by removing the statutory limitation to
laws which regulate drugs, to include other regulatory laws, such as those
applicable non-drug technologies that require premarket approval, genetically
modified plants for instance.

3 comments:

Anonymous
said...

Dupont knew they didn't have a license to sell or develop the product but they did any way and advertized to their shareholders and customers that they were developing a better technology. They also said the product worked when they knew it didn't. They campaign to demonize Monsanto went up to include the ant-trust federal lawsuit that was also recently dropped but despite doing virtaully nothing to share their technology they accused Monsanto of anti-trust. This is why the judge ruled against Dupont -fraud against the court.

About Me

I am a law professor at the University of Missouri-Kansas City School of Law. My primary research interests lie at the intersection of biotechnology and intellectual property. This blog provides analysis and commentary on recent developments relevant to this area of the law.